In Mazdabrook Commons Homeowners Assn v. Khan, 210 N.J. 482 (2012), the New Jersey Supreme Court recently held that a homeowners’ association’s rules that banned the posting of political signs on property owners’ residential units was unconstitutional.

In that case, Wasim Khan (Defendant) was a resident of Mazdabrook Commons, a planned townhouse community that was managed by a homeowner’s association, (Plaintiff). When Defendant ran for town council, he posted at his private residence two signs in support of his candidacy. Plaintiff notifiedhim that the signs violated the association’s rules and ordered him to remove them.

Plaintiff brought suit in the Superior Court, Law Division, Special Civil Part (Lower Court) based upon an objection it had to the Defendant’s rose garden. Defendant filed a counterclaim against Plaintiff, claiming that its sign restrictions violated his free speech rights under the New Jersey Constitution (State Constitution). The Lower Court dismissed Defendant’s counterclaim and held that the sign restrictions did not violate his constitutional rights. Id. at 489.

Defendant appealed to the Appellate Division of Superior Court of New Jersey (Appellate Court). TheAppellate Court explained that the sign restrictions were not content-neutral; favored commercial speech; and foreclosed an entire type of communication that had long been recognized as significant. Accordingly, it held that Plaintiff’s sign restrictions were unconstitutional. Id. at 489-490.

Shortly thereafter, Plaintiff appealed to the New Jersey Supreme Court (Court). Plaintiff argued that a private residential community did not violate free speech rights by the enforcement of rules agreed to by allunit owners. Plaintiff cited the fact that the unit owners received various documents in connection with the purchase of their townhome. Those documents restricted the posting of signs. Id. at 487. For example, the document entitled Rules and Regulations specified that [n]o signs of any kind will be placed in or on windows, doors, terraces, facades or other exterior surfaces of the buildings or Common Facilities Id. at 488.

In its analysis, the Court explained that the State Constitution guarantees individuals a broad, affirmative right to free speech. Id. at 492. The Court quoted the relevant portion of the State Constitution as follows:

[e]very person may freely speak, write and publish his sentiments on all subjects, being responsible for the abuse of that right. No law shall be passed to restrain or abridge the liberty of speech or of the press.

N.J. Const. art. 1.6; Id. at 492.

The Court noted that the affirmative guarantee in the first sentence of that provision offers greater protection than the First Amendment. The First Amendment bars the government from restraining speech. However, in New Jersey, an individual’s affirmative right to speak freely, in certain situations, is protected not only fromunreasonably restrictive and oppressive conduct by the government, but also from private entities. Id. at 493.

Next, the Court applied the three-factor test outlined in State v. Schmid, 84 N.J. A. 2d 615 (1980), to determine the parameters of free speech rights on privately owned property. Under that test, courts considered the following three factors:

(1) the nature, purposes, and primary use of such private property, generally its normal use;

(2) the extent and nature of the public’s invitation to use that property; and

(3) the purpose and the expressional activity undertaken upon such property in relation to both its private and public use.

Id. at 494.

Furthermore, the Court applied the balancing test laid out in Coalition Against War in the Middle East v. JMB Realty Corp., 138 N.J. A. 2d 757 (1994). In that case the courtconsidered not only the three-factor test, but also applied a balancing test. That test required the Court to weigh a private property owner’s interest in controlling activities on their property against the limited and important free speech right sought. Id.

Factor One

The Court applied the three Schmid factors. In regard to the first factor, it explained that Plaintiff was a common-interest community. The nature of the property was distinguishable from other forms of real property because there was a commonality of interest. Thus, owners had to comply with certain commonrestrictions for the overall benefit of the development. Id. at 499.

Factor Two

In regard to the second factor, the Court explained that the property was not public because there was no broad invitation to travel to, or shop in, the development. On the other hand, the importance of the secondfactor was muted due to the fact that Defendant was not an outsider or visitor; rather, Defendant was the owner of the restricted property.

Factor Three

In its analysis of the third factor, the Court stated that Plaintiff restricted political speech which lied at the core of our constitutional free speech protections. Further, it explained that free speech protections assumed particular importance in the context of a person campaigning for public office.

Candidates have a constitutional right to engage in discussion of public issues and to vigorously and tirelessly advocate their own candidacy. Accordingly, the Court held that factor three favored Defendant because Plaintiff’s sign restrictions prevented Defendant from advancing his own candidacy for Town Council by posting signs at his residence. Id. at 499-500.

The Balancing Test

Further, the Court stated that Plaintiff’s sign restriction was a near-complete ban on residential signs. On the contrary, Defendant’s use of his signs constituted only a minimal interference with the Plaintiff’s property or common areas since they were placed on his own private residence. Therefore, the Court determined that Defendant’s right to promote his candidacy outweighed the relatively minor interference his conduct posed to the private property interest. Id. at 500-501.

Accordingly, the Court held that Plaintiff’s sign restrictions were unreasonable and in violation of the State Constitution. As such, it deemed the documents that memorialized the sign restrictions unenforceable. However, the Court did reaffirm an association’s power to adopt reasonable time, place, and mannerrestrictions to serve the community’s interest. Id. at 507.

Commercial Real Estate Law[MUSIC PLAYING] Commercial real estate law is something of a team effort. It's important that you have a law firm that can coordinate the various aspects we're dealing with-- architects, inspectors, banks in terms of financing, and actually, could involve tenants as well. This might be property that's rental property. And a whole host of other things. Not to mention the fact that there could be planning issues, land use issues, where it's important that variances be obtained and things of that nature, permits, and so forth. If we look at it as a legal matter in isolation, where none of those business exigencies matter, we're not doing what we should. If we look at it as a team effort, if we look at it as the lawyer's role is to try to coordinate all those things and work with all those professionals to get to the end game, which is a sale of the property-- whether you're representing the buyer or the seller, you still want that property sale to go forward-- then the result is generally better. The Nissenbaum Law Group is uniquely situated to serve clients and commercial real estate and environmental law, precisely because this is what we do. We're a commercial law firm. These are the exact types of transactions that we focus on. That gives us a unique ability to understand the transaction, understand the business exigencies behind the transactions, and be able to anticipate where problems may arise, obstacles that may be presented before a deal can close. It also enables us to be able to ask the questions that the clients themselves may not even be thinking of yet. Part of the lawyer's job is to advise the client to the extent reasonable of the risks involved. And they are always risks, and some of those risks will be hidden, some of them will be able to be deciphered. Some of them won't. But overall, to work with the client to achieve the result of closing that transaction, if the deal is such that it really should close and not be renegotiated.

Construction Law Info Blog

Construction LawWe have people come to this law firm all the time with construction deals that have gone bad. And I ask them, do you have a contract? And they say, I think I do, let me take a look. I ask them, have they read it? Well, I haven't really looked at it, I just signed it. Or, how about this one, I don't have a contract at all? And when I asked them, why didn't they bring a lawyer in in the beginning, frequently the answer is, because I had a sense that if I brought a lawyer in, if I over-lawyered it, that the deal wouldn't happen, that I would scare everybody away. And I hear this from the contractor side and I hear it from the customer side. But what I try to tell people is that a good lawyer will not muck up the deal. A good lawyer will not give the sense that we don't trust the other side or we're only looking at the worst case scenario. What a lawyer should be doing, and what I believe we do at our law firm, is to bring a level of practicality to the interaction. We understand that the deal should get done. We also understand that protections cannot ever be 100%. But something is better than nothing, and speaking about these eventualities in the beginning before they happen, before anything goes wrong, before it's emotional, is probably the best time to do it. So the two people, maybe more than two people, maybe you have a contractor and a sub-subcontractor, and maybe you have an architect and you have a landlord and all these parties who are acting in good faith, who really want the construction deal to happen, maybe they haven't thought it through and the way they're doing it is not the way it should be done. And the process of trying to put something down on paper is actually a process that serves them all well. Some of the provisions that are really important for a construction contract, whether you are the person retaining the construction services or the contractor, really has to do with the payment and how payment is going to be made, and what milestones need to be accomplished before payment needs to be rendered. When payment, how quickly payment needs to be rendered, in what form, and the level to which the services need to be performed in order to have been deemed to have satisfied and met that milestone, so that you can get paid. Some states actually have laws that are specifically enacted to protect contractors and allow for them to receive payment and secure that payment for services that they have rendered, even without a contract. So for example, in some states that would be called the Prompt Payment Act, it may have different titles in different states, but it specifically says that contractors can obtain a mechanic's lien or a construction lien on the property upon which they have rendered services and have a security interest in that property unless and until they are paid. A very important part of construction law, something that really does not exist in many other areas where there are transactions between people, contracts that are being signed between people, are the consumer fraud regulations and other regulations and statutes that deal only with construction. These are laws and regulations that have been put in place to protect people. And what they say is that contracts that are used in a construction matter, especially a residential construction matter, have to be in a certain format. They have to have certain verbiage, they have to have certain disclaimers and notices. And it can get very elaborate. A violation of this can result in a per se "consumer fraud" lawsuit. Meaning a lawsuit in which the consumer fraud violation is presumed, because the contract wasn't in compliance. Now why is that important? It's important because you could have a situation where a contractor is owed $3000, and he sues for that money because he's not getting paid. The customer alleges that there was a defect in the work and that the contract violated the Consumer Fraud Act because it didn't have certain disclosures in it. And as a result, the customer is able to counterclaim for far more than $3000. The customer is able to counterclaim for its damages for defective work, which of course it has to prove, but once that's proven, it gets those damages times 3. So it's called treble damages and attorney's fees reimbursement. So a $3000 case can result in a $100,000 counterclaim or more. Now, this is all state specific, and there are all kinds of variations throughout the country, but the important thing is that the contract itself must be compliant, not just with common sense, not just reflective of the deal, but also with respect to the regulations and laws that govern construction. All of this is really to say that a construction deal can become something that's very significant and very emotional. We're dealing with the place someone lives, we're dealing with the place someone works, we're dealing with a family business that has been established and has been around for years and possibly decades. And so it's very important that we as lawyers approach this representation with a sensitivity to that dynamic. Our firm enjoys working with clients in construction matters. We work with contractors and we also work with the customers of contractors, and we do that so that we have a complete understanding of the area, not just from the legal aspect, but also from many of the business fundamentals. And so that's what we bring to the table when we take on a construction matter.